Pelorus
Lessons Learned
“The Doctor Problem”, Proceed With Caution
From the vantage point of an angel investor we offer the following cautionary note with regard to investing in early-stage companies whose founders are academics.
As an angel investor you are always on the alert to intercept promising technologies early-on. Early identification of intellectual property with commercial value is difficult and risky but can be immensely rewarding. The further along the development cycle toward commercialization, the lower the risk and the higher the cost of investment. Colleges, universities and national laboratories are great sources of intellectual property with potential commercial value. That said, proceed with caution when considering investing in a start-up company led by or controlled by an academic. Often academics look for funds to support “commercialization.” The academic’s intent to commercialize is often confused with wanting more money to fund research-- not a focused effort to commercialize. Commercialization is a discipline focused on making money from intellectual property. Investors want a monetary return for their money; ROI is the metric. Angel /early-stage investors have no success metric for number of papers published or lectures given. Academics like to “create” intellectual property (write papers, give presentations, receive research grants), the metrics of academia. Academics generally do not like the mundane work of commercializing a product or service--- work for lesser minds. In our experience, many academics lack the discipline or have the patience to focus on commercializing a technology. They are too easily drawn toward purely intellectual pursuits--- see “Avoid Sirens Song.”